A couple of weeks ago, the Statesman reviewed Austin's progress in distributing the 2006 affordable housing bond money. To date, Austin has distributed about $11.8 million of the $55 million we voters approved.

The city is distributing the money to local non-profits. That's a good idea, or at least can be if the city does it right. Competition among non-profits should give us the most affordable housing for the money. (For this to work, of course, the city must turn some of them down.) And turning the non-profits loose should yield some innovative ideas.

I do have a problem with the city's priorities, though. There don't seem to be any. Here are some of the projects the city has approved to date.

Apartments in South Austin for people with disabilities;

Energy-efficient homes in East Austin;

A Habitat for Humanity subdivision in Northeast Austin;

The purchase and renovation of a single home for a 50 year old woman with disabilities;

Efficiency apartments for the homeless

Buying down affordability in a mixed-use project on South Lamar.

A children's shelter.

The city seems to be chasing four or five goals at once: (1) providing transitional housing for the homeless or the near-homeless; (2) promoting home ownership for the low-income; (3) providing disability-accessible housing for the disabled; (4) promoting energy-efficiency in low-income housing; and (5) promoting mixed-income in mixed-use developments.

I don't like this scattershot approach. The city should try to get the best return on its bond money. It may be counter-intuitive, but this means that all the money should go toward the same goal.

In principle, the city is in the same position as a consumer who has $5,000 to apply to her debt. She has a credit card balance at 15% interest, a car loan at 8%, student debt at 6%, and a mortgage at an after-tax rate of 5%. While she may be tempted to spread the money around, she should spend it all on the credit card, where it will earn the highest return.

We need to decide which affordable housing investment gives us the best return. And then we should put all of our money toward that investment until our second option begins to offer a better return.

Which investment gives us the best return? Efficiency apartments for the homeless or near-homeless? Home ownership for the low-income? Affordable housing in upscale, mixed-use projects?

It's not even close, in my opinion: Our priority ought to be transitional housing for the homeless or about-to-be homeless. We do more for individual welfare when we move someone from the street to an apartment than when we move someone from an apartment into a house or an upscale apartment in a mixed-use development. And there are obvious social benefits from getting a homeless man off the street, or keeping a mother and young child out of an emergency shelter. Stable housing allows these people to pull things together, to re-enter the workforce or pursue more education. Finally, the market seems to do a pretty poor job of providing this ultra-cheap housing.

Regardless, we ought to identify our top priority. And then we ought to keep investing in that priority until diminishing returns steer us elsewhere.

September 25, 2008

“Charity” the pig made an appearance at Austin City Hall this afternoon.

Lounging on hay inside a red cage, the 7-month-old Hampshire pig accompanied about 20 supporters of the Proposition 2 charter amendment that will go before voters in November.

The amendment, spearheaded by a group called Stop Domain Subsidies, would ban tax incentives for projects with retail components. It would also stop the city from making tax rebate payments for any existing projects, such as the Domain.

Brian Rodgers, founder of Stop Domain Subsidies, said the 7-month-old Hampshire pig represented “hog developers feeding at the public trough.”

The group said they gathered outside City Hall because the City Council was considering a $75,000 contract with the Vinson and Elkins law firm. The outside counsel would review the effect the amendment would have on the Mueller airport redevelopment.

City officials and outside legal counsel have warned that the amendment, if passed, could snare Mueller because there are retail components of that 711-acre mixed-use development.

Charity the pig didn’t seem to have much of an opinion on the matter. She mostly laid in the hay and snorted a bit. Munching on a strawberry popsicle appeared to be the highlight of her afternoon.

Cute. But our Council members ought to be impeached, then tarred, and then pelted with rotten, salmonella-contaminated tomatoes if they fail to investigate what SDS might do to Mueller. Or to any of the City's other bond or infrastructure commitments, for that matter.

September 24, 2008

Subject: Authorize negotiation and execution of a legal services agreement with Vinson and Elkins, LLP for legal counsel concerning the effect of Stop Domain Subsidies on the Mueller Development, in an amount not to exceed $75,000; and authorize legal proceedings seeking a declaration concerning the effect of Stop Domain Subsidies (Proposition 2 on November 4, 2008 ballot) on the City's Mueller Development existing and future contracts and bonds.

September 23, 2008

Our numbers are very close for some cities. I got a perceived density of 33,000 ppsm for New York; he got 34,000 ppsm. Our numbers weren't so close for some of the others. I got 7,716 ppsm for Boston; he got 10,801.

He used 1990 U.S. Census data while I used 2000 data, which surely accounts for some of the variation. Also, as I noted last time, he used traffic zones rather than census tracts as his base unit. Traffic zones are generally smaller than census tracts, and weighted density rises as the as the geographical area is cut up into smaller units.

September 22, 2008

Gary Barnes, a professor at the University of Minnesota, wrote a paper back in 2001 that calculated weighted densities for a number of U.S. urbanized areas. Like me, he used the term "perceived density."

He used traffic zones rather than census tracts as his base unit. Traffic zones generally are smaller than census tracts, which causes his weighted densities to be somewhat higher than mine for some cities. (Weighted density rises as the geographical area is cut up into smaller units.)

I wasn't aware of this paper when I wrote my posts. If I had been, I wouldn't have spent all that time largely duplicating his work. But I do want to give the man credit. (And I suspect that since he is a professor paid to do this kind of thing and I'm just a lawyer screwing around in his spare time, his work is more thorough.)

September 21, 2008

How does city density affect the proportion of workers who commute by public transportation or walking?

Matt Yglesias links to a chart that purports to show a strong association between density and public transportation use. I don't think the chart is evidence of anything, though. I can't tell how the cities were chosen (Memphis and Milwaukee are in, Houston and Miami are out), so the cities may have been cherry-picked. Also, the authors define cities by their political boundaries rather than their urbanized areas or metropolitan areas, making density comparisons meaningless.

But this piqued my curiosity. I decided to run an analysis using the 32 largest urbanized areas in the U.S. (those with more than 1.3 million residents). I regressed the percentage of workers commuting by public transportation or walking on standard density and on weighted density. For good measure, I also threw in a regression on the ratio of standard density to weighted density.

Conclusions:

There is virtually no association between standard density and the percentage of workers commuting by public transportation or walking.

There is a robust association between weighted density and the percentage of workers commuting by public transportation or walking, although the association is weaker when New York is omitted.

There is an even stronger association between the ratio of weighted density to standard density and the percentage of workers commuting by public transportation or walking. Again, the association is weaker when we omit New York.

I used 2000 Census figures for the urbanized area densities. I used the Census Bureau's 2005 American Community Survey (which is a sample) for the data on mode of commuting. The survey asked workers to identify their "principal" method of commuting.

Standard density

The scatterplot below tells the story. The association between standard density and the percentage of workers who commute by public transportation or walking is very weak (but statistically significant). R2 = .14, which means an urban area's standard density explains only 14% of the variation in the percentage of workers commuting by public transportation or walking. I've shown the trend line (generated by Excel), but its slope (.002) is essentially arbitrary: The 95% confidence interval is (.00014, .0039), which again illustrates there is no meaningful association between the two.

Weighted density

Weighted density is the density at which the average person lives. (See this string of posts for a detailed explanation.) Technically, it is the average density of the urbanized area's census tracts, with each tract weighted by its percentage of total population.

Unlike standard density, there is a strong (and statistically significant) association between weighted density and the proportion of workers commuting by public transportation or walking. R2 is 0.73, which means that weighted density explains 73% of the variation in the proportion of commutes by public transportation/walking. The slope of the regression line is 0.0011 (95% CI = (.00084, 0.0013)), which means that an increase in weighted density of 1,000 ppsm is associated with an increase of 1.1% in the percentage of workers commuting by public transportation or walking.

I should note that New York, which is an outlier in population, weighted density, and in the proportion of commutes by public transportation, has a disproportionate influence on this regression. When New York is omitted, the R2 drops to 0.42. This is a much less robust association (although still statistically significant).

Ratio of weighted density to standard density

The ratio of weighted density to standard density is an interesting statistic. Standard density treats the population as uniformly spread throughout the urbanized area. Weighted density recognizes that population is "clumpy." The ratio of the two gives an indication of the degree of clumpiness. A high ratio suggests the city has a dense core and sparse suburbs. A low ratio suggests that the city's population is uniformly distributed. For example, Miami has a relatively high standard density and a relatively high weighted density, but the ratio of the two is only 1.55, which means the population is more or less uniformly dense, with few very dense concentrations. Boston has a low standard density and a high weighted density; its ratio is 3.32, which indicates that much of its population is concentrated in high-density areas.

We should expect this ratio to be a good indicator of mass transit use. Older, northeastern cities developed dense cores, which were well-served by mass transit before the automobile era. Newer cities, with a more uniformly distributed population, were built around the automobile.

And, indeed, this is the case. R2 = 0.77. The slope of the regression line is 6.5, which means that a 1-point increase in the ratio is associated with a 6.5% increase in the percentage of workers commuting by public transportation or walking. The 95% confidence interval is (5.2, 7.9). The association, again, is highly statistically significant.

New York's effect on the association, again, is quite significant. When New York is omitted, the R2 drops to 0.45.

Correlation versus causation

Correlation does not imply causation. These associations are interesting (at least to me), but I suspect they are being driven by the underlying city form -- older cities with dense, urban cores versus younger, auto-centric cities.

Perhaps the best use of the data is to spot outliers. Portland, for example, is not particularly dense under either the standard or weighted metric. But it has a relatively high proportion of mass-transit users. D.C. is likewise an outlier. This suggests that investments in rail systems increase mass transit use relative to cities of similar densities, although this is hardly conclusive (and LA is a possible counter-example).

I have posted an Excel table with the weighted densities, standard densities, ratios, and public transportation/walking data below the jump.

September 19, 2008

I admit I don't understand high finance. Nor do I clearly understand why the feds have decided to bail out some companies but not others. I therefore appreciate this explanation for laymen by Barry Ritholtz:

Lehman Brothers was like the little kid pulling the tail of a dog. You know the kid is going to get hurt eventually, and so no one is surprised when the dog turns around and bites the kid. But the kid only hurts himself, so no one really cares that much.

Bear Stearns is the little pyro -- the kid who was always playing with matches. He could harm not only himself, but burns his own house down, and indeed, he could have burnt down the entire neighborhood. The Fed stepped in not to protect him, but the rest of the block.

AIG is the kid who accidentally stumbled into a bio-tech warfare lab . . . finds all these unlabeled vials, and heads out to the playground with a handful of them jammed into his pockets.

These complaints have always rankled me because the Bouldin Creek residents want to have their cake and eat it too. They enjoy all the benefits of proximity to SoCo (and increased property values), but they want the city to shield them from the costs. If this happens to crimp business for the SoCo shops and restaurants, so be it. Of course, the SoCo businesses opened up shop on the assumption that their customers could park on the streets. I see a rough equity in the current arrangement.

Equity aside, the RPP program is an inefficient solution to the problem of overflow parking. The street parking is likely more valuable to the businesses than to the residents; I suspect the businesses would outbid the residents if the city put the right to street parking up for bid. Yes, the street parking irritates the residents, but it's cheap to complain and cheap to demand something for free.

A better way to handle these conflicts is through Parking Benefit Districts. Under this program, the city installs parking meters on the streets, puts the revenue into a capital improvement project fund, and then uses some of that revenue for neighborhood improvements.

1. If the city prices the street parking right, a few spots will always be vacant. Drivers will not have to circle the blocks searching for vacant spots. (It's the equivalent of congestion pricing a road.) This will cut down on traffic, one of the neighborhood's main irritants.

2. Free parking distorts the incentives for both businesses and their patrons. Charging for parking gives patrons the incentive to factor in the full cost of driving, which might affect their decision whether to drive or take a bus or taxi instead. (Note that all of us benefit when late-night revelers are discouraged from driving.) Charging for parking also signals businesses when to build more parking.

3. PBDs generate revenue for the city, and provide a form of "soft" compensation for the inconvenience to neighbors.

4. PBDs eliminate the inequity of granting a windfall to the area homeowners at the expense of businesses that opened on the reasonable belief that these streets would be available for parking.

One final point. There are people who are happier living in suburbs and people who are happier living in urban neighborhoods. Urban neighborhoods always have more congestion, more noise and more strange people parking on the streets. Bouldin Creek, like many other central Austin neighborhoods, is becoming more urban. Over the long run, it will attract the kind of people who are more comfortable with the inconveniences of urban living. The city should not give in to the people fighting a rearguard action to maintain the the neighborhood as a semi-suburban enclave. It's better to give everyone the notice that parking meters provide: This is becoming an urban neighborhood, and the City won't try to stop it from happening.

September 18, 2008

I pointed out in my first post that the Stop Domain Subsidies charter amendment would extend the ban on city subsidies to infrastructure improvements and that, although the charter amendment language includes an exemption for certain infrastructure improvements, "the definition of the latter will leave room for lots of disagreement."

We now learn that these disagreements may extend to Mueller. From the Chronicle:

According to Jim Cousar, an attorney with Thompson & Knight LLP and the city's outside counsel for the Mueller deal, "The real problem with the SDS amendment and Mueller – and I'll say at the outset that I sure don't think this was intended – is that it depends on public financing to build a lot of the infrastructure out there." Under the Mueller Master Development Agreement, Catellus Development Group pays for big infrastructure such as major roads, and the city sells bonds to pay them back, which it pays for with a mixture of property and sales taxes. The city created a tax increment financing district to manage the property tax, but the sales-tax component could create problems. "The property tax is OK with the SDS amendment, because the amendment has an exemption for tax increment finance districts," Cousar said. "The time that Mueller was created, there was no such thing as a sales-tax TIF."

The Chronicle also quotes Brian Rodgers, who said there are adequate exemptions to cover the Mueller development, but the article does not explain what those are.

After careful review of this amendment by legal counsel, it is clear to us that if it passes it will have a negative impact on Mueller. We also feel this charter amendment will make it harder, not easier, for the community, the city and developers to achieve the Mueller model of responsible, successful development with ample community benefits -- such as parks and affordable housing -- that fulfill the spirit of true public/private ventures.

I continue to believe that it is a bad, bad idea to enact a charter amendment that poses such a clear risk of unpredictable, potentially drastic consequences.